Consulting firm Oliver Wyman says more than 90% of telcos are piloting or deploying AI. So yes, AI might be the next big thing—in time. But there's plenty of other near-term opportunity for telcos to cash in on.
I’ve benefited from a robust, lengthy telco product background. After a decade with AT&T as a headquarters executive, I had free rein to invent and roll out new products, which included AT&T’s first B2B contact center.
As the CEO of a management consulting firm, I’ve subsequently advised numerous global Tier-1 and Tier-2 telcos on product portfolios that confer first-mover advantage, fast-follower status or a nimble-competitor edge.
When MoffettNathanson, a sell-side research boutique, recently released a sober research note lamenting the telco sector’s outlook, I took a different view. Their concern centered on the “next big thing” and a nostalgia for the era of jaw-dropping achievements—mobile growth, smartphones, and broadband ubiquity. But I smile imagining back to Alexander Graham Bell.
The next big thing: AI
IBM’s work in the telco AI field suggests that winning big depends on meaningful transformations. Many service providers are cautious, concerned about data security and the pace of change.
The tech giant concludes AI is a powerful growth opportunity for telcos, but realizing it requires proactive strategy, ongoing investment and adaptation. Telcos may lead in winnable slices (network automation, security), yet the road will be incremental and measured. For now, patience is warranted.
Near-term prospects
I’m bullish about AI’s prospects for telcos. But for near-term revenue growth there are productized opportunities (structured, sellable solutions) telcos can build and sell to enterprise customers that are surefire winners. In these cases, the telco is the product owner, packager, distributor and channel orchestrator. Three product lines deserve a close look:
Resilience-as-a-Service (RaaS) A bundled, SLA-backed failover solution that integrates fixed/mobile redundancy, SD-WAN, routing prioritization and disaster recovery into a single offering. Delivered as a managed continuity service, it protects enterprises from prolonged downtime caused by cyberattacks, outages or natural disasters. RaaS is not simply a backup system; it is a dynamic orchestration layer that guarantees business continuity with contractual assurance.
Why RaaS now: Uptime is a top buying criterion, threat velocity keeps rising and hybrid work has multiplied failure points. RaaS turns existing assets: SD-WAN, dedicated Internet access, 5G backup and the NOC, into premium, SLA-backed outcomes. It differentiates commodity connectivity, lifts ARPU, reduces churn through sticky contracts and wins budget by delivering measurable continuity that CFOs and insurers increasingly expect.
Compliance-as-a-Service (CaaS). A telco-delivered compliance stack combining secure routing, data-sovereignty assurance, audit trails and industry-specific reporting. Enterprises face a constant drumbeat of regulatory obligations, and many lack the internal tools to address them efficiently. Telcos already navigate a patchwork of regulations; CaaS productizes that experience.
Why CaaS now: Regulatory risk and audit scrutiny are surging across privacy, security and industry rules. Enterprises need turnkey controls, evidence and continuous monitoring, not a sprawl of tools. Telcos can use their network vantage point and managed platforms to enforce policy, retain data and prove compliance with reports. CaaS creates recurring revenue, raises ARPU, reduces churn and bundles naturally with RaaS and OaaS.
Observability-as-a-Service (OaaS). Real-time visibility into application, network and UCaaS performance, built from the telco’s own monitoring infrastructure. As enterprises juggle multiple vendors and opaque performance issues, OaaS provides a unified view of system health, latency, uptime and user experience, from the telco that runs the pipes.
Why OaaS now: Multi-cloud, SaaS, SD-WAN and edge have shattered visibility while CFOs demand service-level objectives tied to outcomes. OaaS consolidates telemetry (logs, metrics, traces), correlates incidents and proves performance end-to-end (user to app to network), cutting repair time and reducing outages. It monetizes existing NOC/tooling, differentiates commodity transport, bundles with RaaS/CaaS, lifts ARPU and reduces churn via outcome-based SLAs.
Monetizing the Telco Product Lines
For the portion of RaaS, OaaS and CaaS that telcos can credibly package, sell and deliver, given their assets, channels and SLAs, we estimate a global telco-addressable opportunity of roughly $20 billion with operating margins around 25%, materially higher than today’s connectivity margins.
RaaS, OaaS and CaaS move telcos upstream, from connectivity providers to strategic enablers and platform builders, helping future-proof market position. They enable deeper customer relationships and new revenue opportunities by solving persistent pain points and supporting enterprise digital transformation. Overall, these product lines are forward-looking, practical and well suited to the industry’s next phase.
John Malone (not to be confused with the Liberty Global and Warner Brother's executive of the same name) is a former AT&T headquarters network executive and is now president and CEO of Eastern Management Group. For 40 years, The Eastern Management Group has advised Tier-1 and Tier-2 carriers worldwide on enterprise opportunities, portfolio planning, research-backed product strategies, and channel development.
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